Inside the OpEx Awards: AIP's Brooks Instrument

A focus on new product development helped propel American Industrial Partners' investment in Brooks Instrument to the overall winner in North America.

Over the course of its investment in Emerson Electric carve-out Brooks Instrument, American Industrial Partners managed to nearly triple EBITDA – from $14 million at the time of the acquisition to $40 million in 2011 – and increase the company’s market share from 15 percent in 2007 to 23 percent at the time of its exit in early 2012.

That kind of growth wouldn’t have been possible without two add-on acquisitions, expansion into untapped markets, the launch of several new product lines, and a streamlining of the manufacturing process – plus a lot of time spent on the front line.

One thing that particularly caught our judges’ eye was the company’s investment in new product
development. Previously Brooks had primarily been a supplier of low-flow measurement and control devices
to the general industrial and petrochemical sectors. However, under AIP’s ownership, a number of new products were rolled out – partly thanks to the intellectual property it had acquired through the addons.

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Those acquisitions expanded the firm’s reach into other market segments like microelectronics and alternative energy. “AIP’s model is strong on internal resources,” said judge David Turner of Guardian Life Insurance. “They parachuted an entire team into Brooks, early on and for several months, maybe the better part of a year, to get things organized and under control. One thing they focused on, which is something that most investors either don’t fully grasp or don’t have the capability to do so, was to help Brooks [improve] its product development pipeline,
and [think about] how to commercialise the [intellectual property].”

In addition to expanding the Brooks’ product lines, AIP also rehabilitated a nearly-shuttered facility in Allen, Texas, which had been acquired in one of the add-ons. The firm’s remarkable focus on improving Brooks’ manufacturing capabilities resulted in the creation of an industry-best lead time.

Brooks’ rapid development was clearly accelerated by the AIP team, three members of which (at least) worked

EBITDA: $14m in 2007
$40m in 2011

Market Share: 15% in 2007
23% in 2012

solely at the company’s manufacturing facilities. AIP’s professionals were responsible for optimising design features, developing a material management system and creating a supply chain network. All told, this facilitated the sale of almost $100 million in intellectual property obtained via the two acquisitions.

The development of manufacturing, in addition to the hiring of direct representation for targeted emerging markets, also had tangible benefits in regards to the company’s work force, which grew from 520 in 2007 to 800 at the time of the exit.

“By acquiring and commercialising intellectual property, supporting new product development, developing
efficient manufacturing processes, optimising procurement and consolidating a global manufacturing
footprint, Brooks more than doubled revenue and tripled EBITDA during our investment period,” says AIP
partner Eric Baroyan.

A worthy winner, then – so much so, in fact, that the Americas judges chose it as the overall winner for the entire region.

Private Equity International will be featuring all award winners over coming weeks.